Oil industry limps back to life

HURRICANE AFTERMATH As US fuel prices jumped to a record average US$2.867 a gallon, 30 states announced an investigation into `price gouging' by filling stations

AFP , WASHINGTON

Michael Marciniak, left, of Pensacola, Florida, fills up containers with gasoline that he is selling at a makeshift station as a line of people wait in Biloxi, Mississippi, on Friday. Marciniak and his brother bought 825 gallons of gas in Florida and drove to Biloxi to sell it at cost to local residents in return for Mississippi residents helping Florida out during past hurricanes.

PHOTO: AFP

Petrol prices hit new highs across the US on Friday as gas stations ran dry after Hurricane Katrina, but the oil industry limped back to life and help was coming from Europe.

Thirty US states announced an investigation into "price gouging" by petrol stations accused of cashing in on Katrina's devastation.

"We want to determine if storm-related factors were the only things responsible for this sudden and dramatic jump of prices at the gas pump," Pennsylvania Attorney General Tom Corbett said.

Democratic politicians called on President George W. Bush to take extra steps to keep a lid on gasoline prices, including even a restoration of price controls last seen during the 1970s oil crisis.

That kind of extreme intervention would appear remote.

But the administration has outlined measures including the limited release of crude from official reserves, an easing of environmental fuel standards and a waiver to allow foreign ships to ferry gasoline between US ports.

Since Katrina, US oil companies have chartered at least 15 to 20 tankers from Europe, each capable of carrying 37,000 tonnes of petrol, shipping brokers in London said.

That is triple the normal weekly amount. "The number is just crazy," one broker said on condition of anonymity.

The emergency measures have so far done little to rein in fuel prices, which have soared to new highs after Katrina knocked out vital oil installations in the southern US.

US gasoline prices jumped US$0.16 in a single day to a record average US$2.867 a gallon (3.78 liters) on Friday, the American Automobile Association said.

Many motorists are reporting prices topping US$3 a gallon as well as empty fuel pumps across the South, after a spate of panic buying by drivers and a lack of fresh supplies from hurricane-hit refineries.

World oil prices slumped on Friday as the US government led a drive by major industrial powers to release emergency supplies of crude onto markets still reeling from Hurricane Katrina.

New York's main contract, light sweet crude for delivery in October, fell US$1.90 to close at US$67.57 a barrel.

On Tuesday the contract had hit a historic high of US$70.85, a day after Katrina swept through vital oil installations in the southern US and the Gulf of Mexico.

In London, the price of Brent North Sea crude for October delivery lost US$1.66 to US$66.06 a barrel. It hit a record US$68.89 on Tuesday.

US Energy Secretary Samuel Bodman said the US would sell 30 million barrels of crude oil from its Strategic Petroleum Reserve on the market from next week.

Another 30 million barrels of crude products such as gasoline will be released by other members of the 26-nation International Energy Agency, with European countries expected to contribute the lion's share.

AG Edwards analyst Bill O'Grady said the extra supplies amounted to a "huge" infusion into the market which should continue to depress prices next week.

It amounts to two million barrels of oil a day for an initial period of 30 days -- the output of two big refineries.

IEA executive director Claude Mandil said in a statement that all member states would take "collective action in response to the interrupted oil supplies in the Gulf of Mexico caused by Hurricane Katrina".

The IEA holds an estimated 4.1 billion barrels of public and industry oil stocks, of which about 1.4 billion are government-controlled for emergency purposes.